CA Restaurants Face Mass Layoffs As Wage Hike Looms

California restaurant operators are preparing for a steep minimum wage increase for fast food service workers by laying off staff. Pizza Hut and Round Table Pizza, among others, intend to release around 1,280 delivery drivers in 2024 in anticipation of the impending legislation that would increase the minimum pay for fast food employees to $20 per hour.

In 2022, Democrat California Governor Gavin Newsom gave a state-appointed board the authority to establish minimum wage, working conditions, and training requirements for fast food establishments.

Reports show that businesses are laying off workers in anticipation of the state’s planned increase in the minimum wage from $16 to $20 per hour starting April 1. This is especially true for pizza places that use external delivery drivers.

A representative from Fat Brands, which owns Round Table Pizza shops in California, informed inquiring media outlets that the current state of the restaurant industry is trying to keep the doors open and employees employed.

As of January, 726,000 people were employed in the fast food industry in California, a decrease of 1.3% from September 2023. Statistics showed that private-sector employment declined by 0.2% during the same period.

El Pollo Loco is one of many California eateries that has informed investors that it will be automating part of the food-making process in response to the rising expense of labor.

A loophole in the legislation allows companies like Panera, which prepare and sell bread as a standalone menu item, to avoid a wage rise, which has sparked debate. Greg Flynn, who owns twenty-two Panera restaurants throughout the state, contributed more than $160,000 to Gavin Newsom’s campaigns.

Alexander Johnson, owner of ten Auntie Anne’s pretzel shops and Cinnabon shops in California, has said it hurts him to consider closing locations or releasing employees. He said the current situation in California saddens him.

As reported,  Johnson has reduced his team by ten individuals due to his concerns that the salary increases will increase labor expenditures by nearly half a million dollars.